CHICAGO: US grain futures fell on Thursday, with corn hitting a three-week low and soybeans down 2 percent, as ideal growing conditions developing in the Midwest grain belt dampened bullish sentiment over tight old-crop supplies.
Soybean futures posted their largest daily loss in about a month as investors sold off long positions and exited bull spreads that earlier this week lifted prices to the highest levels since November.
"It's the idea that you have to feed the bull (market) and if we have better weather we'll see a deterioration in prices during the growing season," said Joe Hofmeyer, analyst at CHS Hedging.
Frequent rainfall and warmer weather in the extended forecast should boost growth of the corn and soybeans planted in recent weeks, agricultural meteorologists said
The largely favorable outlook weighed on corn futures at the Chicago Board of Trade, with benchmark July corn down 6-3/4 cents at $6.43-1/2 per bushel and new-crop December corn off 3-1/2 cents at $5.34.
CBOT July soybeans fell 30-1/2 cents to $15.10-1/4 per bushel, the largest one-day drop since May 15. New-crop November soybeans eased 11-3/4 cents to $13.02-1/2.
Some of the selling was an ongoing reaction to Wednesday's US Agriculture Department monthly supply and demand report, which said US farmers will harvest the largest corn and soybean crops ever this autumn even as existing supplies continued to tighten.
"It's just aftermath positioning from the (crop) report," said Ken Smithmier, analyst at the Hightower Report in Chicago.
Rains this week in the northern Midwest slowed the final phases of corn and soybean plantings but also provided valuable soil moisture ahead of the peak summer heat of the growing season, said Commodity Weather Group meteorologist, Joel Widenor.
USDA cut its corn production forecast on Wednesday by 1 percent, compared to a more than 2 percent reduction expected by analysts, by reducing yields and leaving planted acreage unchanged.
Even with the reduced forecasts, corn production would rise to 14.0 billion bushels and soybeans to 3.39 billion bushels, with each topping previous records set in the 2009/10 growing season, the government said.
"The market knows we probably lost some acreage but I think we've moved passed that and we focus on the weather and growing conditions," Smithmier said.
US wheat traded lower for much of the session but posted modest gains after prices tested recent lows, prompting investors to buy on the dip, traders said.
USDA sharply cut its outlook for world wheat supply next season helping to counter pressure from a surprise increase in 2013 US winter wheat production.
CBOT July wheat futures ended 2-1/2 cents higher at $6.85-1/2 after earlier hitting the lowest level since May 21.
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